Digital Signatures Closer: Senate Clears Hurdle To Create Compromise Bill

March 31, 2000

As efforts on Capitol Hill stalled, a number of states have passed over the federal government and enacted digital signature legislation -- an important development toward the paperless real estate transaction. (S. 761)

But this week, Congress -- in particular, the Senate -- finally made political inroads that could help deliver paperless, legally binding online signatures by the end of the year.

Congress is forming a conference committee to reconcile separate e-signature bills from the House and Senate. After some party squabbling in the Senate over who would sit on the committee, an acceptable agreement was reached this week.

Conference committee Republicans include former presidential hopefuls John McCain (R-Ariz.) and Orrin Hatch (R-Utah), as well as Spencer Abraham (R-Mich.), and Patrick Leahy (D-Vt.)

By last November, both houses had separately and overwhelmingly approved digital signature legislation. The House passed the E-SIGN bill, widely supported by the financial services industry, while it was viewed that the Senate?s bill generally offers stronger consumer protections.

The Millenium Digital Commerce Act, passed the Senate by "unanimous consent" last fall, was the result of a compromise between Abraham, its original sponsor, and Leahy, the ranking Democrat on the Judiciary Committee. According to reports, it was Leahy who argued for additional consumer and state protections in the bill.

The House?s E-SIGN bill allowed lenders to make disclosures required by consumer protection laws, such as the Truth in Lending Act, through electronic means. After some debate, the bill was amended to require banks to have consumers sign a "conspicuous and visually separate" consent request before such disclosures can be sent electronically.

Financial services industry players who backed the House bill argued consumers had the choice to "opt-in" to receive electronic disclosures and if they didn't make a decision, legal notices would be sent on paper.

Laws that place digital signings on the same legal ground as paper have long been key to the paperless home-buying experience.

Both congressional bills acknowledge e-signatures as legally binding as paper signatures. Digital signatures involve technologies that verify a person's identity, authenticate certain documents and assure safe transmission of contracts over the Internet.

Inman News Services

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North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.